The RBI’s double delight move definitely caught the market by surprise. Though there were a few voices advocating a 50 bps cut in interest rates, the market consensus did not expect that. The market liked the positive surprise and its initial reaction was very positive. But the RBI has also changed its stance to neutral and decided to provide ample clarity on expectation setting. This clarity should keep the market sentiment in check, and the sobering nature of guidance on future rate cuts should work on investors’ minds over the coming weeks.
That said, this announcement was cheered by the market, with the Bank Nifty hitting new highs and lending financials seeing a lot of trading interest. Global factors will always keep coming back to influence sentiment and market direction. In fact, global sentiment will often override domestic sentiment and eventually decide the market’s direction. However, there will always be days when domestic sentiment turns very positive and the market cheers domestic news flows.
What should investors do in such shifting times? Staying stock-specific and focusing on portfolio needs will ensure that the volatility is used constructively in individual portfolios. Buying specific stocks, scaling up holdings on temporary bad news, improving portfolio quality, tightening allocations in individual stocks, and deploying capital consistently during these times will be the best strategy.
When an investor focuses more on what they need to do instead of worrying about what the market is doing, they turn their attention toward meaningful portfolio actions—actions that deliver significantly once market sentiment changes for the better. These are times to focus on one’s own priorities and make the most of what the market offers, especially during drawdowns in your portfolio.